April 23: Doctors experiment with single price, single bill

Dr. Richard Golden describes himself as an “avid but poor athlete.” His bum knee, however, was making it too painful to jog, downhill ski or play golf.

This winter, the 62-year-old Excelsior resident decided to stop putting off surgery and signed up for a new program through Twin Cities Orthopedics that aims to make getting a new knee as uncomplicated as buying a carton of milk.

Golden was quoted an upfront price of $21,000 that covered the entire operation — including surgery, medication, post-op recovery and unlimited physical therapy appointments. And it came on a single bill he could submit to his insurance company.

“This is the way to go,” said Golden, a neurologist who knows how complicated the medical system can be. “It’s like getting an all-inclusive vacation where they think of everything.”

The Affordable Care Act is spurring a host of efforts to make health care more patient-friendly and less costly, and the pay-one-price approach is among them. After decades of discussions and small-scale tests, the federal government in February launched a nationwide pilot with 450 health care organizations to see if bundling payments for a “single episode of care” could help transform a system in which doctors have long been paid for each discrete encounter with patients.

Minnetonka-based UnitedHealthcare is involved in a bundled-price pilot for cancer treatment, while other hospitals and insurers around the country are focused on such ailments as diabetes, heart disease or pneumonia.

“This is just the beginning,” said Rajeev Kapoor, a partner in the health practice at global management consulting firm A.T. Kearney. “We will see many more of these programs across the nation.”

An integrated approach

Total knee replacement surgery has emerged as a frequent candidate for package pricing because it’s a common procedure with wide variation in costs.

Wisconsin has launched a three-year bundled care pilot project to study hundreds of knee replacement surgeries at nine hospitals in seven health care systems. The Mayo Clinic in Jacksonville, Fla., launched its first bundled payment for knees in December in partnership with Blue Cross Blue Shield of Florida.

The key to making bundled payments work is control over as much of patient care as possible from start to finish.

Twin Cities Orthopedics, a doctor-owned practice, takes all of the risk of covering the procedure, CEO Troy Simonson said. “We’ve won some and we’ve lost some, too.”

A team of on-staff nurses and a nurse practitioner counsels patients before surgery and cares for them afterward. Twin Cities Orthopedics handles the lab work and the medications, and performs the surgery at an outpatient clinic, which takes much of the guesswork out of anticipating the cost of the medical staff and keeping the lights on.

Instead of a costly hospital stay, Twin Cities Orthopedics sends patients to an apartment a block away at York Gardens, an assisted-living facility in Edina. Surgeons make daily rounds, nurses provide round-the-clock care and a physical therapist gets patients moving within hours of surgery.

“We have ownership of all aspects,” said Justina Lehman-Lane, a doctor of nursing practice who was hired to develop and oversee the program for Twin Cities Orthopedics. She makes sure every patient has her cellphone number. “We’re like the small-town clinic.”

But the program is limited to people who don’t have other serious medical issues that might require a hospital stay. And it isn’t covered by Medicare, because the federal health care program for seniors only covers hospital stays. Since June, when the bundled-care Excel program launched, just 21 patients have gone through it.

Still, the program appears to be delivering. The $21,000 sticker price is about 30 percent less than what insurance companies in the Twin Cities pay for a typical knee replacement, Simonson said, and in line with what Medicare pays over the course of six months.

“It’s where health care should go,” he said. “Patients love it. We give full disclosure on the price, and they’re only dealing with us as far as the billing goes, not hearing from six or seven different entities.”

Still, Twin Cities insurance companies have yet to embrace the one-price, one-bill offer. So far, only Medica has agreed to work with Twin Cities Orthopedics. Medica officials consider it a pilot and declined requests to talk about the program. HealthPartners is still considering it, Simonson said.

The hurdle? Bookkeeping. The arcane computerized billing system that girds the nation’s health care infrastructure is built around a fee-for-service model. That means there’s one code used to pay the surgeon, another to pay the person who reads X-rays, another to pay the pharmacist, and so on.

To get around this, Medica handles each claim for Twin Cities Orthopedics Excel program by hand. “Health care loves to overcomplicate things,” Simonson said.

Going around insurers

One approach that Twin Cities Orthopedics and other providers are using is to pitch their medical services directly to large businesses that insure their own workers.

Wal-Mart cut a bundled-care deal in October with six top hospitals, including the Mayo Clinic and Cleveland Clinic. The program covers certain cardiac and spine procedures as well as transplants at no additional cost for about 1.1 million employees and their families enrolled in the retailer’s health plan. Grocery chain Kroger Co. has flown employees around the country to get the best value for common orthopedic procedures.

Locally, Minnesota Gastroenterology, a physician-owned practice in St. Paul, offers a pay-one-price colonoscopy program that has a direct contract with Wilson Tool International.

When businesses foot the bill, Sorenson said, they have an incentive to keep costs down. He said a number of firms with 500 or more employees have shown an interest in the Twin Cities Orthopedics program, which Sorenson would like to expand to cover shoulder and hip replacement as well as conditions such as carpal tunnel syndrome and chronic back pain.

Chris Blegen, a 49-year-old firefighter whose workers’ comp insurer covered his new knee, said the one-on-one care took the stress out of the surgery. His wife, Cheryl, relaxing in a giant recliner chair last week at York Gardens, said she was grateful to avoid the beeping and constant disruptions of a hospital stay.

They could eat at the bistro downstairs or bring in groceries and cook in the efficiency kitchen.

Even the bus driver who brought the couple to York Gardens after the surgery knew to go slow over potholes to avoid jarring pain.

“You don’t feel like a number,” Blegen said. “You feel like you’re important to them.”